Co-operative Bank Wins Court of Appeal Ruling Over KSh1.39bn Loneview Estate Dispute

The Court of Appeal rejected Mathew Musau’s request for an injunction, clearing the way for Co-operative Bank to proceed with actions concerning ten homes linked to a KSh1.39 billion debt owed by Loneview Developers Ltd.

A three-judge bench ruled that Musau had not demonstrated that his pending appeal would be rendered nugatory without the injunction, and therefore dismissed the motion.

Musau had taken the matter to the Environment and Land Court in July 2024 after that court refused to protect the ten units at Loneview Estate that he claimed as his own.

The conflict centres on a Syokimau parcel, LR No. 12916, registered to Loneview Developers and charged to Co-op Bank for KSh1 billion; the bank stated the outstanding balance was KSh1.39 billion as at October 26, 2023.

Musau contends that Suraya Property Group Limited surrendered the ten homes to him after it failed to complete payment for land previously owned by his father, Sebastian Kathilu, and that a settlement dated September 12, 2015 transferred the units to him, expecting them to be released from the bank’s security.

Co-op Bank rejected that position, saying it was not a party to the settlement and that any such agreement could not defeat the bank’s rights under the original and subsequent mortgage facilities granted to Loneview.

“A copy of the Certificate of Title Grant No. I.R. 130518 in respect to land reference 12916 (the suit property) shows that it is registered in the name of Loneview Developers Limited,” the judges noted.

Earlier court records indicate a KSh500 million mortgage facility was granted in January 2014 together with an escrow agreement favouring the bank, with apartment sale proceeds intended to redeem the loan.

The appellate judges concluded that even if Musau’s appeal were arguable, the injunction request failed the second limb of the test and that his appeal would not be rendered nugatory, leading to dismissal of his application.

Co-op Bank said it could meet any award should Musau eventually succeed, and the court observed that Musau had not disputed the bank’s financial capacity.